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**U.S. Securities and Exchange Commission 						Washington, DC 20549****FORM 10KSB/A**

[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURIES EXCHANGE				         ACT OF 1934				          For the Fiscal Year Ended: December 31, 2004

Commission File Number 000-07693**SoftNet Technology Corporation**				(Exact name of small business issuer as specified in its charter)				   Nevada                                                                            13-4096315				(State of other jurisdiction of                                                     (IRS Employer       				incorporation or organization)                                                  Identification No.)One Anderson Road, Suite 105, Bernardsville, New Jersey 07924				(Address of principal executive offices)908-204-9911				(Issuer's telephone number)				T & G 265 La Grande Avenue, Berkeley Heights, NJ 07922				(Former name, former address, and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]    No [  ] 				APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of December 31, 2004:				          As of December 31, 2004, there were outstanding : 112,669,077 shares of Class A Common Stock, $0.001 par value, and 5,000,000 shares of Class B Common Stock, $0.001 par value.				          Transitional Small Business Disclosure Format (check one);

Yes [  ]    No [X] 

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**PART I**

**Item 1.        Business**				          On January 12, 2002, Solutions Technology, Inc. was acquired as a wholly owned subsidiary.  On February 14, 2002 Softnet Technology Corp (SoftNet), formerly known as T & G2, changed its name from International Mercantile Corporation to T & G2 and simultaneously the state of incorporation from Missouri to Nevada.  On or about August 2004 the Company changed It’s name from T & G2 to SoftNet Technology Corp.  SoftNet began trading with the ticker symbol of TTGG. In August 2004 the ticker symbol was changed to STTC and currently trades under that trading symbol on the Over The Counter Bulletin Board. On or about March 18, 2002, SoftNet acquired Zingo Sales, Ltd. as a wholly owned subsidiary.  Therefore, SoftNet ran its business operations through the two wholly owned subsidiaries – Solutions Technology, Inc. and Zingo Sales, Ltd.  On or about March 2004, SoftNet acquired Holtermann & Team GmbH (a Frankfurt, Germany Based Company) as a wholly owned subsidiary and subsequently changed It’s name to SoftNet International GmbH.  On or about July 31, 2004 SoftNet sold Zingo Sales for a $300,000 note and an ongoing sharing of revenue generated by Zingo in perpetuity.  Effective July 1, 2004, Softnet acquired Wholesalebyus, LLC.  After year-end 2004, SoftNet acquired Indigo Technology Services.  A complete business description of SoftNet and subsidiaries follows below:

**Solutions Technology, Inc.**

          Solutions Technology has developed the SecureTime Biometric ID System (hereinafter referred to as SecureTime) to solve the time and attendance needs of companies.  In the high-paced tension of the global economy, it is getting increasingly difficult for small and mid-size firms to remain competitive.  Everyday small and mid-size firms unable to keep pace with the rising cost of managing their employee base, is being added to the long list of recent business causalities.  The explanation most often tendered to account for this phenomenon is that small and mid-size firms are unable to take advantage of the latest technological management solutions. High development and acquisition costs put cost-saving solutions out of the reach of smaller, marginally funded companies.  For those fortunate enough to acquire these technologies, the cost of maintaining these systems makes further upgrades cost-prohibitive.  SecureTime has developed a solution that effectively responds to the growing technology market, particularly as it relates to the small and mid-size firm.				          Innovative in its application of advanced attendance management technology, SecureTime significantly reduces the cost of tracking employee attendance. To add even more value to the system, they bundle a payroll management system with the attendance maintenance system – further reducing the cost of maintaining employee records.  Even the most conservative impact estimates show small and mid-size firms can dramatically cut their attendance management costs by installing this state-of-the art attendance management system.  For a minimal service fee, SecureTime installs attendance management hardware, integrates clock maintenance software and connectivity software and provides around the clock maintenance of the system.   To increase the value of the system to the client, they include payroll management software that allows the centralized SecureTime office in Long Beach, California to compile and prepare complete payroll records for all their managed users.  Once verified by the using client, this data can then be electronically forwarded to an issuing payroll management office.  The issuing payroll office then prepares and issues the employee’s payroll check.  More important, SecureTime provides this service for an affordable price.  The combination of affordability, reliability and security virtually eliminates the need for most small and mid-size firms to maintain their expensive (and often outdated) organic attendance and payroll management systems.				          Historically, capital costs have made it impossible for small and mid-size firms to access this kind of advanced attendance management technology.  The cost to purchase, service, and upgrade such technology for a small firm can run as much as $20,000 per year.  These high capital expenses make the barrier to entry so high most small firms cannot reasonably consider integrating such technology.  Unfortunately, many of these smaller firms have higher than average (relative to larger firms) turnover, making attendance verification more problematic and costly.   The SecureTime attendance management service is the perfect solution for this very serious management challenge.  

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**Concept**

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          Relying on long-time established “best business practices,” SecureTime has found an innovative way to solve a routine but challenging management problem – attendance management.  How do they do it?  First, SecureTime integrates the latest in biometric, fingerprint recognition technology into a time clock thereby providing small and mid-size firms one the most reliable and secure employee attendance tracking system available.  Then, they enhance this sophisticated hardware by developing and loading software that allows the clock to:
    - Maintain complete and accurate attendance data;   Automatically up-load the time clock data to a centralized storage facility in a off-site location, and;Instruct the centralized computer to prepare timely and accurate summary reports (which are electronically transmitted back to the client).			
To further advance the clock’s usefulness to the client, SecureTime includes with the clock payroll management software that allows SecureTime’s centralized processing center to prepare detailed payroll information.   (If the client requests, SecureTime can forward that information to a payroll check preparation service, so that the client is not required to maintain its own low-tech organic payroll maintenance system.)
          Cost-saving technologies to solve routine management problems made affordable and accessible to the small and mid-size business --- gives the Corporation a serious advantage in the attendance management market.  The Corporation benefits because it establishes a presence in a seriously under-served market.  Clients benefit because the system dramatically reduces the cost of managing attendance and payroll preparation.  Investors benefit because they have become part one of fast-growing, highly-dynamic technology service organization around.
**Services**
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          SecureTime offers the only complete turnkey solution a small or mid-size company needs to collect time and attendance, scheduling, entitlements, and personal/pay records. With a seamless interface to payroll services, it provides the client with one of the most cohesive time and attendance management system available anywhere.****

**The Time Clock**

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          The biometric time clock eliminates the possibility of time card fraud by making it virtually impossible for one employee to clock in for another. Capitalizing on the latest advances in fingerprint recognition technologies, the time clock uses a state of art smart card to store employee information.  When the employee reports to work, they press their fingers to the screen.  The fingerprint is compared in real time to the pre-loaded fingerprint associated with that employee. Only when the two fingerprints match does the employee get credit for attendance.  This turnkey solution is a stand-alone system.  The client only pays a minimal per employee service charge to purchase the services.  Once installed, it will replace the client’s costly, low-tech organic system.   The customer is only required to respond to the exceptions to the schedule that occur during the payroll period to receive the most accurate and reliable attendance data available.				          Client advantages include:
- Affordable access to a reliable, high-quality alternative to company owned low-tech time clocks and to in-house labor resources.   Access to SecureTime high level technical teamCustomized attendance reporting
- Real-time access to valuable attendance maintenance data   Full turnkey operational solution to attendance management, with a software bundle that provides both attendance and payroll data.			
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**Market Strategy**

**               **

**Target Market Segment Strategy**
- Companies with 30 or more employees     Companies experiencing rapid growthCompanies dissatisfied with current level of service
- Companies tired of the high cost of maintenance contracts     Companies who can't control buddy punchingCompanies who require personalized service
- Companies in under served geographic locations			  ****  ****  ****  **Competitive Edge**  ****            SecureTime enters the market with a significant competitive edge: there are no competitors that combine both a hardware and software systems as part of their attendance solution.   The expensive attendance solutions available from competing vendors (often designed to service large corporations) require the customer to purchase equipment or sign an expensive long-term maintenance contract.  The SecureTime solution is affordable, reliable and secure. Further, the system can be easily expanded to handle any future payroll and attendance management needs that the customer may have.              SecureTime is a solution provider and developing new high-tech solutions is its expertise and key to the continued growth of our customer base.  Its initial position in the small and mid-size firm market is very hard to match.  However, it is important for the Corporation to maintain its strategic focus by continuing to develop, market, and maintain the latest in technological solutions. ****  ****  **Competition and Buying Patterns**  ****            Currently, the attendance maintenance industry is divided into two service areas: one that sells hardware and other that provides the payroll service. The purchase cost of a typical time-clock system without a biometric device is $12,000 to $15,000.  Contributing to this financial stress, most systems require the client to purchase an annual maintenance service (averaging in the thousands of dollars) in order to keep pace with advances in attendance maintenance. In all cases the hardware and software come from different vendors and maintenance is always third party, which introduces longer run-up times and constant integration complications.  For Fortune 500 companies with deeper pockets, this may be a minor inefficiency; however for struggling smaller and mid-size firms this can be a serious drain on limited capital resources.  To make matters worse for the smaller firms, others in the attendance maintenance industry prefer to cherry pick the best industries leaving the majority of business to be service by small local providers.  Unfortunately, most small providers do not have the technological sophistication to provide the sole source solution and a high level of service their customers seek.  ****  ****  **Market Analysis Summary**  ****            Initially SecureTime has been focusing on and will continue to market to companies with 30 or more employees located in geographic markets not being serviced by the competition.  SecureTime will target small to mid-sized companies that have recently experienced rapid growth and have not yet added a payroll department.  These strategically selected markets, along with the technological advantages of the SecureTime attendance management system, gives the Corporation significant sales leverage - an advantage that extends well into the future.   
**Strategies and Implementation Summary**

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          To better service our customer’s installation and marketing needs, SecureTime has developed a two-prong implementation strategy.  On one level, it has centralized its operation center in Long Beach, CA.  This allows the Corporation to take advantage of the economy of scale that comes 
  
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  			from centralizing service operations and it allows SecureTime to maintain the highest in-service operations available.  The second prong is to decentralize installation and customer-interface by relying on geographically dispersed, independent service distributors.   This avoids the degradation of customer support so often associated with large centralized operations.  Further, it gives the kind of personalized customer support so necessary to the successful customer-supplier exchange.  			
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**Positions for Growth**

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          Initial expansion markets include: Southern California, Nevada, Arizona, Texas, Oklahoma, and Florida.  In time, the Corporation will expand its markets in the Southwest, Pacific Northwest, Northeast and Southeast.  Additionally, SecureTime is now beginning to talk with and explore the possibility of partnering with large and small (Professional Employee Operations) PEO’s for the distribution of the SecureTime System.  A revenue sharing ratio between the Corporation and the distributor compliments the affordable entry costs to encourage the natural entrepreneurial drive of our distributors.   Hardware and software initiatives are not only designed to maintain system viability, they are designed to promote growth by demonstrating system flexibility.   The combination of a highly motivated local team of distributors and exceptionally creative home team virtually ensures the continued growth of this valuable technology. SecureTime has found it difficult to get the distributions and sales of the SecureTime system jumpstarted.   This is mainly due to a lack of funds available to implement the marketing and distributions strategies discussed above.  However, the funding concerns of the Company seem to have been solved.**WholesaleByUs, LLC**				          WholesaleByUs, LLC (WBU) has developed the WBU System to solve the need for Suppliers of products (manufacturers wholesalers distributors, retailers and the like) to reach the widest array of consumers through the Internet.  In the high-paced tension of the global economy, it is getting increasingly difficult for small and mid-size firms to remain competitive and for the large suppliers of products to reduce costs while reaching the largest audience of consumers.  Everyday firms are unable to keep pace with the expansion of the Internet and the wide and varied uses by consumers.  The explanation most often tendered to account for this phenomenon is that new technology and procedures are constantly being created on an almost daily pace and it is unreasonable and impossible for a company to run their business and cost effectively meet the demands of keeping pace with these new technologies and procedures.  High research and development costs put these advances out of reach for companies who are already fighting to keep slim profit margins.  WBU has developed a solution that effectively responds to the growing Internet market, particularly as it relates to the major supplier of products.  However, great advantages and rewards can be and will be reaped by the smaller supplier as well.

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          Innovative in its application of advanced technology and ability to massively increase exposure, WBU significantly reduces the cost of exponentially expanding a company’s exposure for their products on the Internet and ultimately finalizing a sale. To add even more value to the system, WBU bundles an accounting package along with the most advanced shipping and tracking system around further reducing the cost for a supplier of products selling on the Internet.  Even the most conservative impact estimates show small and mid-size firms can dramatically increase exposure to consumers while actually reducing the cost of selling to the consumer.  For larger companies, the results show an immediate expansion of distribution and sales at a reduced selling cost resulting in greater revenues and profitability. 
  
**Concept**

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          **WBU**has found an innovative way to solve a routine but challenging management problem – to reach the largest and most diverse audience possible on the Internet without adding a single dollar of cost to the supplier of the product(s).  How do they do it?  First, SecureTime integrates the latest in software technology into selling over the Internet providing small, mid-size and large firms one the most reliable and cost effective ways to 
  
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  			reach the largest audience possible and at the same time providing a reliable and secure product tracking system for all parties involved.  Then, they enhance this sophisticated WBU back office by developing and loading software that allows:- Maintain a complete and accurate accounting of all sales;   Automatically register the best selling items and where the sales occurred for better placement of the products in the future;Electronically instruct the supplier of the product(s) to be immediately shipped to the WBU Fulfillment center within hours of the sale being consumated;
- Automatically pay the supplier upon the sale over the Internet;   The fulfillment center is controlled by an advanced software program for the most efficient and cost effective shipment of the product.			
          Cost-saving technologies and software have set up to create an innovative system that has made affordable and accessible to the small, mid-size and large businesses the WBU System.  This gives the Supplier a serious advantage in over other suppliers who do not use the WBU System for selling through the Internet.  The Corporation benefits because it establishes a greatly, almost exponentially, increased presence on the Internet.  Consumers benefit because the system dramatically reduces the cost of managing and handling products for sale ultimately reducing the cost to the consumer.  Portals benefit because by having WBU sell through them, there is increased sales and earnings and increased consumer traffic through the portal creating a better environment for advertising.  Investors benefit because they have become part one of fast-growing, highly-dynamic software and technology service organizations around.

**Services**

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          WBU takes this amazing system even further by providing what is called Co-Branding.  This provides for individuals (stay-at-home moms/dads, individuals looking to make part time money, micro to small organizations) the ability to sell from a list of already available WBU products through the WBU system and earn extra money with very little time invested.  Additionally, these individuals can also sell their own products through the WBU System.  Through a very simple uploading procedure, the individual will upload the product(s) and instantaneously be selling through the largest collection of portals.  There is no cost for WBU in this process, so every sale that is garnered through this process is automatically adding to the bottom line of the Company ****

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**Market Strategy**

**Target Market Segment Strategy**
- Consumers who by through the Internet     Companies or individuals who have a product(s) for salePortals on the Internet
- Companies tired of the high cost of middle men     Companies who require personalized serviceCompanies in under served geographic locations 
- Companies rolling out a new product			  ****  ****  ****                 
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**Competitive Edge**

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          Anyone, individual or corporation, who sells on the Internet inherently, competes with WBU.  However, no one sell through the Internet with the Software, technology and procedures that WBU currently offers.  This has allowed WBU to enter the market with a significant competitive edge: there are no competitors that combine both software and technology systems that afford the ability to sell through a massive amount of portals worldwide to a worldwide consumer base.   The expensive software and technology systems that have been developed over a few years are in place and it would take a competitor quite some time to develop such a system.  Micro to small suppliers of products do not have the staff and/or technical personnel nor the financial ability to develop such a system. Mid to Large companies that are selling their own products just want to increase their sales and WBU does that for them with no additional costs and in most instances at a reduced cost.  Portals on the Internet are just looking for increased traffic to their website, increased transactions and increased revenue and earnings – WBU provides that for absolutely no charge to the Portal.  The SecureTime solution is affordable, reliable and secure. Further, the system can be easily expanded to handle any future product lines including used products.				          WholesaleByUs, LLC is a solutions provider and developing new high-tech solutions is its expertise and key to the continued growth of our supplier and customer base.  Its initial position in the market is very hard to match.  However, it is important for the Corporation to maintain its strategic focus by continuing to develop, market, and maintain the latest in technological solutions.

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**Market Analysis Summary**

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          WBU has been focusing on and will continue to market Its services to any individual and/or company with a product to sell whether they are already selling on the Internet or not.  WBU will target initially target the most popular portals on the Internet to be added to the WBU System for selling products.  We will target any consumer who buys through the Internet.  Expansion to not so well know portals will occur in time as well as offering services and vacation packages.  Also, used products and services will also be offered in the future.  WBU has positioned itself well and provides a service that gives the Corporation significant sales leverage and an advantage that extends well into the future.

**Strategies and Implementation Summary**

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          To better service our customer’s installation and marketing needs, SecureTime has developed a two-prong implementation strategy.  On one level, it has centralized its operation center in Phoenix, Arizona, CA.  This allows the Corporation to take advantage of the economy of scale that comes from centralizing service operations and it allows WBU to maintain the highest in-service operations available.  The second prong is to decentralize Shipping to local regions around the United States and Internationally to reduce the cost of shipping and Fulfillment for WBU thereby automatically increasing profitability. Further, WBU now maintains a customer care email and toll free number for those who purchase products through the WBU System. This gives the kind of personalized customer support so necessary to the successful customer-supplier exchange.  No one else in the industry provides for this type and amount of customer care.**Indigo Technology Services**
  
**Introducing the world to Better Ideas**

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          Indigo Technology Services is a system integrator, software engineering and development firm that specializes in software applications and Internet connectively in the hospitality, financial, insurance, manufacturing, education, and transportation industries.
  
**Company Mission**
  
          Our mission is to constantly strive to develop enduring relationships with our clients by providing quality services through the efforts of a highly skilled and highly motivated work force. Indigo Consultant’s employees are its future - A future that is continuously nurtured through recognition and opportunity for achievement of personal career goals within an environment of synergy, integrity, mutual respect and long-term commitment.
    
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**Indigo Technology Services Commitment **

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          Indigo Technology Services is committed to your success. From concept to code, our professional consultants understand the principles of information engineering and model-based development. Whether it's developing a strategic information plan conducting customized training, or generating code, we have the skills and the experience you need to be successful. Indigo Technology Services can provide comprehensive training and consulting services on all phases of the application development life cycle in web-based, client/server-based, or mainframe-based legacy systems.**SoftNet International GmbH**          SoftNet International has been setup to further the business operations of the other subsidiary companies in the international markets – mainly in Europe.  The first major project is taking the WBU business plan to the European Union and surrounding countries.**Item 2.        Properties**				          The SoftNet has several different sites that operations are run from the Subsidiary Companies.  The first is an office operated by James M. Farinella at One Anderson Road, Suite 105, Bernardsville, NJ 07924 and acts as the Corporate Headquarters for Softnet.  This space is approximately 1,000 square feet.  There are three more offices out on the west coast where most of the business operations are conducted through two of the wholly owned subsidiaries that are based on the west coast the United States.  Solutions Technology has two offices. One of the offices is located at 4335 South Industrial Road, Suite 430, Las Vegas, NV 89103 while the other office is maintained at 2704 E. Spring Street, Suite 200, Long Beach, CA 90806.  WBU is based in Phoenix, Arizona while Indigo Technology Services is based in Atlanta Georgia.  The German Subsidiary, SoftNet International, is based in Frankfurt, Germany and will act as the main headquarters for most of SoftNet’s international business operations in the future.**Item 3.        Legal Proceedings**          At the current time, there are no legal proceedings or threatened legal proceedings.**Item 4.        Submission of Matters to Vote of Security Holders**          Not applicable.
  
**PART II**
  
**Item 5.        Market for Company’s Common Stock and Related Stockholder Matters**
  
**Market For Securities**
  
          The Company's common stock is listed for quotation on the OTC Electronic Bulletin Board under the symbol "STTC". The market for such shares is limited and no assurance can be given that a significant trading market for SoftNet’s common stock will develop or, if developed, will be sustained. However, there is approximately 1,500,000 shares traded on a daily bases providing for some liquidity for the publicly traded shares				          The following table sets forth the range of the high and low closing bid prices of the Company's common stock during each of the calendar quarters identified below. These bid prices were obtained from the National Quotation Bureau, Inc. and NASDAQ Trading & Market Services and do not necessarily reflect actual transactions, retail markups, markdowns or commissions. The transactions include inter-dealer transactions. The Company's management believes that the following data is anecdotal and may bear no relation to the true value of SoftNet’s common stock or the range of prices that would prevail in a fluid market.
  
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  2003High* Low*1st Quarter									$0.15									$0.1052nd Quarter									$0.155									$0.053rd Quarter									$0.23									$0.1154th Quarter									$0.198									$0.1275  								  								    								  								  2004High*Low*1st Quarter 								$0.105								$0.0752nd Quarter 								$0.15								$0.043rd Quarter 								$0.075								$0.0184th Quarter								$0.184								$0.038**Item 6.        Management’s Discussion and Analysis of Financial Condition and Results of Operations**
**Introduction and Forward Looking Statements**          This document contains forward-looking statements which may involve known and unknown risks, uncertainties and other factors that may cause SoftNet Technology Corp’s (“SoftNet”) actual results and performance in future periods to be materially different from any future results or performance suggested by these statements. SoftNet cautions investors not to place undue reliance on forward-looking statements, which speak only to management’s expectations on this date.				          Certain statements contained herein, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Such forward-looking statements are identified by words such as “intends”, “anticipates”, “hopes” and “expects”, among others, and include, without limitation, statements regarding the Company’s plan of business operations, anticipated revenues, related expenditures, and the results of any business transactions. Factors that could cause actual results to differ materially include, among others, the following: acceptability of the Company’s services in the market place, general economic conditions, political and economic conditions in the United States and abroad, and competition.				          The following discussion and analysis highlights the financial position and results of operations of SoftNet as of and for the year ended December 31, 2004 compared to as of and for the year ended December 31, 2003. The business activities of the Company were that of the four wholly owned subsidiaries: Solutions Technology Inc., WholesaleByUs, LLC, Indigo Technology Services, and SoftNet International GmbH. Comparisons are provided, however, it is important to understand that the Company was essentially in its first year of operations in 2004. Additionally, the Company disposed of WholesaleByUs in October 2005. It is important to note that the Company currently reports its operations from that of Indigo Technology Services and its newly acquired subsidiary Inspara. Solutions Technology Inc. was also disposed in 2006, however, contributed minimally to the total operations of the Company in 2004 and 2003. SoftNet International was and remains basically in development for both periods.				          In 2004, the Company entered into a transaction to acquire a German based business entity for the distribution and furtherance of the Company’s business, acquired WholesaleByUs, LLC, and utilized funds to further the development of Solutions Technology Inc. to bring the SecureTime Biometric ID System to the point where it could be mass marketed.				          The Company anticipates that their sources of liquidity will come from the private sale of the Company’s securities to cover the funding of corporate expenses, such as legal and accounting and filing fees, as well as Sarbanes-Oxley compliance.
  
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  			          In 2005, the Company acquired Indigo Technology Services and has expended funds to expand the WholesaleByUs business prior to its disposition and engaged TVA Productions in Los Angeles, California to build brand name awareness for the Company’s products, which will assist the Company in achieving profitability. Additionally, new sales agents and a new facility in the southern California area have been obtained and a major marketing push is just being instituted. The development of SoftNet International was completed and preparations to begin sales are in the final stages for business operations in international markets. The Company’s management entered into a transaction for funding in the form of debt financing. With this debt funding, SoftNet issued 150,000,000 shares of the Company’s Class A Common Stock in certificate form. These shares were being held in escrow in certificate form in a reputable European Bank in Switzerland. The loan never closed, and these shares were subsequently cancelled. The Company is still in process of finding a suitable equity source to assist in funding their operations.**2004 Comparison with 2003**          Revenues for 2004 were $343,760 as compared to $14,834 for 2003. As mentioned, the Company’s acquisition of WholesaleByUs, LLC, a company that is in its first full year of operations was the reason that the Company experienced revenue growth. The Company’s consulting revenues remained consistent with 2003.			          Cost of revenue for 2004 was $201,805 compared to $2,528 for 2003. The increase in cost of revenue was attributable to the WholesaleByUs business entity.			          The gross margin of 41% in 2004 was attributable to WholesaleByUs. The gross margins in 2003 related to the consulting based services, which are generally very high.			          Operating expenses for 2004 were $3,381,578 as compared to $2,044,940 an increase of approximately $1,350,000 due in large part to the impairment of goodwill of over $2,000,000 in 2004 offset by the valuation of the common stock issued for services in 2003 as compared to 2004. The common shares issued were for professional fees and marketing programs in 2003. The impairment was for the WholesaleByUs and German subsidiary in 2004.			          Other income (expense) was $(43,528) for 2004 compared to $(223,215) for 2003. In 2003, the Company incurred expenses for a legal settlement. 			          The gain (loss) on discontinued operations and gain (loss) on disposal was from the Company’s former subsidiary Zingo Sales. The Company disposed this subsidiary in July 2004, and in accordance with SFAS 144, restated the 2003 financial statements to reflect the discontinued operations of this subsidiary.  
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  **Liquidity and Capital Resources**          At December 31, 2004, the Company had a net working capital deficit of $200,588 compared to a net working capital deficit of $173,655 in 2003. This decrease was attributable to increases in accounts payable and accrued expenses.			          The Company used  $939,191 in operating activities in 2004 compared to $1,079,542 in 2003. This change was attributable in large part to the improvement in the Company’s results of operations in 2004 compared to 2003.			
          The Company used  $107,107 in investing activities in 2004 compared to $277,145 in 2003. This change was attributable to the Company’s changes  in their related party advances during 2004.				          The Company had net cash provided by financing activities of  $1,084,731 in 2004 compared to $1,358,850 in 2003. This change was attributable to private sales of equity securities being greater in 2003 compared to 2004.				          In pursuing its business strategy, the Company may require additional cash for operating and investing activities. The Company expects future cash requirements, if any to be funded from operating cash flow and cash flow from financing activities.				          The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has suffered recurring losses from operations and at December 31, 2004 and 2003 had working capital deficits as noted above. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
  
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  **Item 7.        Controls and Procedures					Internal Control Policy**          In April 2003, the Company implemented an Internal Control Policy allowing for the confidential receipt and treatment of complaints in regards to the Company’s internal accounting controls and auditing matters.  A director, officer or employee may file a confidential and anonymous concern regarding questionable accounting or auditing maters to an independent representative of the Company’s Audit Committee.  As of December 31, 2003, an evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Company's management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company's disclosure controls and procedures were effective as of December 31, 2003. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to December 31, 2004.**Code of Ethics**          In September 2002, the Company implemented a Code of Ethics by which directors, officers and employees commit and undertake to personal and corporate growth, dedicate themselves to excellence, integrity and responsiveness to the marketplace, and work together to enhance the value of the Company for the shareholders, vendors, and customers.**Item 8.        Financial Statements and Supplementary Data.**          All financial information required by this Item is attached hereto beginning on Page F-1**Item 9.        Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.**          There are no disagreements with the current auditors and there has not been a change and no anticipation of a change with the auditor. Currently engaged by the Company is Bagell, Josephs & Company, LLC..  The auditors are located at High Ridge Commons, 200 Haddonfield Berlin Road Suites 400-403, , Gibbsboro, NJ 08026.  
**PART III**
  
**Item 10.        Directors and Executive Officers of the Company**          James M. Farinella – Chairman of the Board/President/CEO				          Age: 38 years old          Number of shares owned:        2,243,193 Class A shares				                                                         2,500,000 Class B shares				          David A. Facciani – Executive Vice President/Board of Directors				          Age: 61 years old				          Number of shares owned:        2,048,250 Class A shares				                                                         2,500,000 Class B shares				          Doug Wetzel – Board of Directors				          Age: 50 years old				          Number of shares owned:             64,000 Class A shares**Item 11.        Executive Compensation**          On or about July 2004 the CEO of the Company started to receive a gross salary of $7,500 per month.  Additionally, all members of the board of directors receive an annual fee of $10,000**. **As of December 31, 2004 two Board Members received the fee.  The Chairman of the board had not received the fee for 2003 or 2004.  This fee has been accrued.
  
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  **Item 12.        Security Ownership of Certain Beneficial Owners and Management.**          The following table sets forth, as of December 31, 2003 the only persons known to the Company to be beneficial owners of more than five percent (5%) of the outstanding number of shares of the Company.			          James M. Farinella – Chairman of the Board/President/CEO			          Age: 38 years old			          Number of shares owned:        2,243,193 Class A shares			                                                         2,500,000 Class B shares****          David A. Facciani – Executive Vice President/Board of Directors			          Age: 61 years old			          Number of shares owned:        2,048,250 Class A shares			                                                         2,500,000 Class B shares			          Doug Wetzel – Board of Directors			          Age: 50 years old			          Number of shares owned:             64,000 Class A shares**Item 13.        Certain Relationship and Related Transactions**          Amounts due to related parties at December 31, 2004 and 2003 were $63,367 and $162,622, respectively, and include the following:			          A note payable to an officer totaling $0 and $51,922, respectively, at 10% interest, payable monthly, due on demand.			          A note payable to company’s through common ownership in the amount of $68,061 and $109,000, respectively, at 10% interest, payable monthly, due on demand. At December 31, 2004, the Company has approximately $16,402 in accrued interest to this company.**Item 14.        Exhibits, Financial Statements, Schedules and Reports on Form 8-K**     (a)         The following documents are filed as part of this Report.    Financial Statements.
- Reports on Form 8-K     Acquisition Agreement for Holtermann & Team GmbH*Acquisition Agreement for WholesaleByUs, LLC*
****
********			          *Previously filed

13

**SIGNATURES**

          Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.**SoftNet Technology Corp					(Registrant)**/s/ James Farinella                James Farinella				President				Dated:   March 17, 2006

14

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**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES					(FORMERLY T & G2, INC.)					CONSOLIDATED FINANCIAL STATEMENTS						DECEMBER 31, 2004 AND 2003**

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES					(FORMERLY T & G2, INC.)						INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

**                                                                                                                         Page(s)**Report of Independent Registered Public Accounting Firm                                      1-2				Balance Sheets as of December 31, 2004 (Restated) and 2003                               3				Statements of Operations for the Years Ended				   December 31, 2004 (Restated) and 2003                                                            4				Statement of Changes in Stockholders’ Equity (Deficit)				    for the Years Ended December 31, 2004 (Restated)  and 2003                          5				Statement of Comprehensive Income (Loss) for the				    Years Ended December 31, 2004 (Restated) and 2003                                      6				Statements of Cash Flows for the Years Ended				   December 31, 2004 (Restated) and 2003                                                          7-8				Notes to Consolidated Financial Statements                                                         9-35                                                             

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

				To the Stockholders of				Softnet Technology Corp. and Subsidiaries				(Formerly T & G2, Inc.)				Bernardsville, NJ

****

****

We have audited the accompanying consolidated balance sheets of Softnet Technology Corp. and Subsidiaries (the “Company”) as of December 31, 2004 and 2003 and the related consolidated statements of operations, changes in stockholders’ equity (deficit), comprehensive income (loss), and cash flows for the years then ended. These consolidated financial statements are the responsibility of management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with standards established by the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The accompanying consolidated financial statements for December 31, 2004 and 2003 have been prepared assuming the Company will continue as a going concern. As discussed in Note 10 to the consolidated financial statements, the Company has incurred substantial accumulated deficits. These issues lead to substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also discussed in Note 10. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

As discussed in Note 17, the Company has restated the consolidated financial statements to incorporate additional disclosures omitted from the previously reported consolidated financial statements. These disclosures and amendments have increased the net loss and accumulated deficit by $1,200,000 from a loss of $2,058,587 to $3,258,587 and an increase in the accumulated deficit from $19,203,696 to $20,403,696 for the year ended December 31, 2004. There were no restatements effecting the year ended December 31, 2003.

1

			In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Softnet Technology Corp. and Subsidiaries as of December 31, 2004 and 2003, and the results of its consolidated operations, changes in stockholders’ equity (deficit), comprehensive income (loss), and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.**BAGELL, JOSEPHS & COMPANY, L.L.C.**BAGELL, JOSEPHS & COMPANY, L.L.C.				Gibbsboro, New Jersey				February 22, 2005, except Note 17 dated January 5, 2006

2

**SOFTNET TECHNOLOGY CORP., AND SUBSIDIARIES****(FORMERLY T & G2 INC.)****CONSOLIDATED BALANCE SHEETS****DECEMBER 31, 2004 AND 2003****ASSETS****(Restated)****(Reclassified)****2004****2003**  Current Assets:  Cash and cash equivalents						 $         50,272						 $        11,839  Accounts receivable, net						          199,612						             5,625  Note receivable						          300,000						                  -    Net assets from discontinued operations						                   -  						         258,992  Prepaid expenses and other current assets						            38,449						             2,222      Total Current Assets						          588,333						         278,678    Fixed assets, net of depreciation						            18,386						           31,050  Deposits						              3,570						             2,070  Goodwill, net of impairment						                   -  						                  -    **TOTAL ASSETS**						 $       610,289						 $      311,798						============						============  **LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)****LIABILITIES**Current Liabilities:  Accounts payable and accrued expenses						 $       725,554						 $      289,711  Due to related parties						            63,367						         162,622        Total Current Liabilities						          788,921						         452,333  **      Total Liabilities**						          788,921						         452,333  **STOCKHOLDERS' EQUITY (DEFICIT)**  Preferred Stock, Series A, $1.00 Par Value; 5,000,000 shares       authorized, 0 shares issued and outstanding at       December 31, 2004 and 2003, respectively						                     -						                    -  Preferred Stock, Series B, $.001 Par Value; 5,000,000 shares       authorized, 0 and 282,703 shares issued and outstanding at       December 31, 2004 and 2003, respectively						                     -						                283  Common Stock, Class A, $.001  Par Value; 500,000,000      shares authorized, 263,150,469 and 35,669,077 shares issued,      150,000,000 and 0 shares held in escrow and       and 112,869,069 and 35,377,677 shares outstanding at      December 31, 2004 and 2003, respectively						          263,150						           35,669  Common Stock, Class B, $.001  5,000,000 shares authorized     and 5,000,000 shares issued and outstanding at       December 31, 2004 and 2003 respectively						              5,000						             5,000  Subscriptions receivable						        (159,114)						       (124,815)  Stock issued as collateral for note payable						        (900,000)						                    -  Warrants						            62,500						           62,500  Additional paid-in capital						     20,997,557						    17,063,275  Treasury stock, at cost, 281,400 shares						          (37,338)						         (37,338)  Accumulated other comprehensive income (loss)						            (6,691)						                    -  Deficit						   (20,403,696)						  (17,145,109)  **      Total Stockholders' Equity (Deficit)**						        (178,632)						       (140,535)  **TOTAL LIABILITIES AND STOCKHOLDERS'						EQUITY (DEFICIT)**						 $       610,289						 $      311,798						============						============

The accompanying notes are an integral part of the  consolidated financial statements.				3

**SOFTNET TECHNOLOGY CORP., AND SUBSIDIARIES****(FORMERLY T & G2 INC.)****CONSOLIDATED STATEMENTS OF OPERATIONS****FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003**  **(Restated)****  ****(Reclassified)****2004****2003**  **OPERATING REVENUES**  Revenue						 $           343,760						 $         14,834  						     **COST OF SALES**						              201,805						              2,528  **GROSS PROFIT **						              141,955						            12,306  **OPERATING EXPENSES**   Professional fees and compensation expenses						              843,859						       1,250,136   Advertising and marketing expenses						              112,096						          448,037   General and administrative expenses						              354,007						          308,097   Depreciation, amortization and impairment						           2,071,616						            38,670**       Total Operating Expenses**						           3,381,578						       2,044,940  **LOSS BEFORE OTHER (EXPENSE)**						         (3,239,623)						      (2,032,634)  **OTHER (EXPENSE)**   Legal settlement						                         -						         (192,000)   Interest expense, net						              (43,528)						           (31,215)**       Total Other (Expense)**						              (43,528)						         (223,215)   **NET LOSS FROM CONTINUING OPERATIONS**						         (3,283,151)						      (2,255,849)  **DISCONTINUED OPERATIONS**   Gain (loss) from discontinued operations, net of income taxes						                  8,482						           (97,983)   Gain on disposal						                16,082						                      -**      Total Discontinued Operations**						                24,564						           (97,983)  **NET LOSS BEFORE PROVISION FOR INCOME TAXES**						         (3,258,587)						      (2,353,832)  **Provision for Income Taxes**						                         -						                (800)  **NET LOSS APPLICABLE TO COMMON SHARES**						 $      (3,258,587)						 $   (2,354,632)						=============						=============   **NET LOSS PER BASIC AND DILUTED SHARES**						 $         (0.04899)						 $      (0.04183)==========================   From continuing operations						 $               (0.05)						 $            (0.04)   From discontinued operations						 $                 0.00						 $            (0.00)   From sale of subsidiary						 $                 0.00						 $                 -    **WEIGHTED AVERAGE NUMBER OF COMMON ****    SHARES OUTSTANDING**						         66,521,080						     56,289,764						=============						=============

The accompanying notes are an integral part of the  consolidated financial statements.				4

  **SOFTNET TECHNOLOGY CORP., AND SUBSIDIARIES****(FORMERLY T & G2 INC.)****CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)****FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003**  Accumulated   CollateralOther ComprehensivePreferred Stock APreferred Stock BCommon Stock Class ACommon Stock Class BUnearnedSubscriptionsfor NoteAdditional TreasuryIncomeDescriptionSharesAmountSharesAmountSharesAmountSharesAmountCompensationReceivablePayableWarrantsPaid -in CapitalStock(Loss)DeficitTotal  Balance, December 31, 2002           -   $          -                  -   $             -    78,928,744 $        78,929       1,142,858 $    1,143 $          (1,310) $       (46,155) $ (8,666,667) $    62,500 $    22,839,650 $               - $               - $    (14,790,477) $    (522,387)Cancellation of common stock B shares           -             -                    -                -                    -                    -        (1,142,858)     (1,143)                    -                     -                    -                -                  1,143                -                  -                         -                    -  Issuance of common share B shares            -             -                    -                -                    -                    -         5,000,000       5,000                    -                     -                    -                -                 (5,000)                -                  -                         -                    -  Repurchase of 291,400 shares of treasury stock           -             -                    -                -                    -                    -                      -              -                      -                     -                    -                -                        -         (37,338)                -                         -           (37,338)Stock issued for compensation           -             -                    -                -        1,260,000             1,260                    -              -                      -                     -                    -                -              103,940                -                  -                         -          105,200Stock issued as collateral for note payable           -             -                    -                -      32,100,000           32,100                    -              -                      -                     -      (2,247,000)              -           2,214,900                -                  -                         -                    -  Stock cancelled for collateral as note payable           -             -                    -                -    (98,766,667)         (98,767)                    -              -                      -                     -      10,913,667              -        (10,814,900)                -                  -                         -                    -  Shares issued for consulting services and settlement           -             -                    -                -        6,142,000             6,142                    -              -                      -                     -                    -                -              674,218                -                  -                         -          680,360Shares issued for cash           -             -                    -                -      16,005,000           16,005                    -              -                      -          (359,560)                  -                -           1,500,948                -                  -                         -       1,157,393Payments on subscriptions receivable           -             -                    -                -                    -                    -                      -              -                      -           280,900                  -                -                        -                  -                  -                         -          280,900Discounts of common stock for cash           -             -                    -                -                    -                    -                      -              -                      -                     -                    -                -              479,610                -                  -                         -          479,610Amortization of unearned compensation           -             -                    -                -                    -                    -                      -              -                 1,310                   -                    -                -                        -                  -                  -                         -              1,310Issuance of Preferred Stock B           -             -          282,703            283                  -                    -                      -              -                      -                     -                    -                -                    (283)                -                  -                         -                    -  Reclassification of debt to equity on note payable           -             -                    -                -                    -                    -                      -              -                      -                     -                    -                -                69,049                -                  -                         -            69,049Net loss for the year           -             -                    -                -                    -                    -                      -              -                      -                     -                    -                -                        -                  -                  -           (2,354,632)    (2,354,632)Balance, December 31, 2003           -             -          282,703            283    35,669,077           35,669       5,000,000       5,000                    -          (124,815)                  -         62,500       17,063,275       (37,338)                -         (17,145,109)       (140,535)Preferred shares issued as collateral for promissory    note           -             -          668,000            668                  -                    -                      -              -                      -                     -                    -                -                    (668)                -                  -                         -                    -  Preferred shares issued for note           -             -       2,000,000         2,000                  -                    -                      -              -                      -       (2,000,000)                  -                -           1,998,000                -                  -                         -                    -  Shares issued for legal            -             -                    -                -             30,000                  30                    -              -                      -                     -                    -                -                  3,270                -                  -                         -              3,300Shares issued for accrued expenses           -             -                    -                -             50,000                  50                    -              -                      -                     -                    -                -                  7,450                -                  -                         -              7,500Shares issued for consulting services           -             -                    -                -        3,585,000             3,585                    -              -                      -                     -                    -                -              328,065                -                  -                         -          331,650Shares issued as collateral for note agreement           -             -                    -                -    150,000,000         150,000                    -              -                      -                     -         (900,000)              -              750,000                -                  -                         -                    -  Shares issued for acquisition of Holtermann           -             -                    -                -      10,000,000           10,000                    -              -                      -                     -                    -                -              990,000                -                  -                         -       1,000,000Shares issued for acquisition of WholesaleByUs    20,000,000           20,000                    -              -                      -                     -                    -                -              780,000                -                  -                         -          800,000Shares issued for cash           -             -                    -                -      43,816,392           43,816                    -              -                      -            (34,299)                  -                -           1,075,214                -                  -                         -       1,084,731Cancellation of preferred shares           -             -         (950,703)          (951)                  -                    -                      -              -                      -                     -                    -                -                     951                -                  -                         -                    -  Net loss for the year, as previously stated            -             -                    -                -                    -                    -                      -              -                      -                     -                    -                -                        -                  -           (6,691)         (2,058,587)    (2,065,278)Restatement adjustment, see Note 17           -             -      (2,000,000)       (2,000)           2,000,000          (1,998,000)                 -           (1,200,000)    (1,200,000)Balance, December 31, 2004           -   $        -                    -   $           -    263,150,469 $      263,150       5,000,000 $    5,000 $                 -   $     (159,114) $    (900,000) $    62,500 $    20,997,557 $    (37,338) $      (6,691) $    (20,403,696) $    (178,632)						======						======						========						=======						================						==========						=======						=========						=========						=========						========						=========						=========						============						==========						=========
The accompanying notes are an integral part of the  consolidated financial statements.				5
**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES****(FORMERLY T & G2, INC.)****CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)****FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003**            Deficit, December 31, 2003						 $ (17,145,109)    Net loss for the year ended December 31, 2004 (restated)						      (3,258,587)   **TOTAL DEFICIT DECEMBER 31, 2004**						 $ (20,403,696)============    Comprehensive (loss), December 31, 2003, net of tax						 $                   -  **Other comprehensive income, net of tax:**   Foreign currency loss for year ended December 31, 2004						             (6,691)  **Accumulated other comprehensive (loss)**						 $          (6,691)============    Deficit, December 31, 2002						 $ (14,790,477)    Net loss for the year ended December 31, 2003						      (2,354,632)   **TOTAL DEFICIT DECEMBER 31, 2003**						 $ (17,145,109)============    Comprehensive (loss), December 31, 2002, net of tax						 $                   -  **Other comprehensive income, net of tax:**   Foreign currency loss for year ended December 31, 2003						                      -  Accumulated other comprehensive (loss)						 $                   -						============
The accompanying notes are an integral part of the consolidated financial statements.				6
**SOFTNET TECHNOLOGY CORP., AND SUBSIDIARIES****(FORMERLY T & G2 INC.)****CONSOLIDATED STATEMENTS OF CASH FLOWS****FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003**          **(Restated)****(Reclassified)****2004****2003****CASH FLOW FROM OPERTING ACTIVIITES****Continuing Operations:**   Net loss						 $   (3,258,587)						 $  (2,354,632)   Adjustments to reconcile net loss to net cash     used in operating activities       Depreciation 						            21,652						           31,215     Amortization of unearned compensation						                      -						             1,310     Impairment of goodwill						       2,049,964						                     -     Common stock issued for consulting services 						          331,650						         488,360     Common stock issued for legal						              3,300						                     -     Common stock issued for compensation 						                      -						         105,200     Common stock issued for settlement of legal proceeding 						                      -						         192,000     Foreign currency change						             (6,691)						                     -     Discount on issuance of common stock 						                      -						         479,610     Net cash provided received in acquisition of subsidiary						            10,325						                     -  **  Changes in assets and liabilities**     (Increase) decrease in accounts receivable						         (137,538)						           11,225     (Increase) decrease in prepaid expenses						                 173						            (1,769)     (Increase) in deposits						             (1,500)						                     -     Increase (decrease) in accounts payable and       and accrued expenses						            56,543						         139,744     Total adjustments						       2,327,878						      1,446,895  **     Net cash (used in) operating activities -****       continuing operations**						         (930,709)						        (907,737)  **Discontinued Operations:****    Gain from discontinued operations**						             (8,482)						           97,983**    Adjustments to Reconcile Net Cash (Used in) ****      discontinuing operations**						                      -						        (269,788)**  ****    Net cash (used in) operating activities -  ****       discontinued operations**						             (8,482)						        (171,805)**  ****     Net cash (used in) operating activities **						         (939,191)						     (1,079,542)**  ****  ****CASH FLOWS FROM INVESTING ACTIVITIES****Continuing Operations:**   Decrease in amounts due to related parties						           (99,255)						        (270,578)   Acquisition of fixed assets						             (7,852)						            (6,567)  **      Net cash (used in) investing activities**						         (107,107)						        (277,145)
The accompanying notes are an integral part of the  consolidated financial statements.				7
**SOFTNET TECHNOLOGY CORP., AND SUBSIDIARIES****(FORMERLY T & G2 INC.)****CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)****FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003**  **(Restated)****(Reclassified)****2004****2003**  **CASH FLOWS FROM FINANCING ACTIVITES****Continuing Operations:**    Proceeds from common stock issuances and stock subscriptions						 $  1,084,731						 $   1,438,293    Net payments from issuance of notes payable - bank						                  -  						          (32,705)    Net payments from issuance of notes payable - other						                  -  						            (9,400)    Repurchase of shares						                  -  						          (37,338)**       Net cash provided by financing activities**						     1,084,731						      1,358,850  **NET INCREASE (DECREASE) IN****    CASH AND CASH EQUIVALENTS**						          38,433						             2,163  **CASH AND CASH EQUIVALENTS -****    BEGINNING OF YEAR**						          11,839						             9,676  						 						 **CASH AND CASH EQUIVALENTS - END OF YEAR**						 $       50,272						 $        11,839======================**  ****SUPPLEMENTAL DISCLOSURE OF CASH FLOW ****   INFORMATION:****  ****CASH PAID DURING THE YEAR FOR:**    Interest expense						 						 $        40,125======================  **SUPPLEMENTAL DISCLOSURE OF NONCASH****  ACTIVITIES:**    Issuance of common stock for:         Consulting services						 $     331,650						===========						 $      488,360						===========       Legal						 $         3,300						===========						 $                  -						===========       Compensation						 $                 -						===========						 $      105,200						===========       Accrued expenses						 $         7,500						===========						 $                  -						===========       Acquisitions						 $     800,000						===========						 $                  -						===========       Settlement of legal proceeding						 $                 -						===========						 $      192,000						===========       Preferred stock issued for investment						 $  2,000,000						===========						 $                  -						===========       Discounts on issuance of common stock						 $                 -						===========						 $      479,610						===========   Impairment of goodwill						 $  2,049,964						===========						 $                  -						===========   Forgiveness of debt for note payable - other						 $                 -						===========						 $        69,049						===========   Cancellation of stock for collateral for note payable						 $     900,000						===========						 $ 10,913,667						===========     Fair value of the net liabilities acquired						 $     260,289						 $                  -   Goodwill acquired						    (1,249,964)						     						                     -   Common stock issued for accrued expenses						     1,000,000						                     -  						 $       10,325						===========						 $                  -						===========
The accompanying notes are an integral part of the consolidated financial statements.				8

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES					(FORMERLY T & G2, INC.)						NOTES TO CONSOLIDATED FINANCIAL STATEMENTS						DECEMBER 31, 2004 AND 2003**

**NOTE 1 -    ORGANIZATION AND BASIS OF PRESENTATION**

On January 12, 2002, International Mercantile Corporation acquired Solutions Technology, Inc. (“STI”), formerly known as Clickese.com (“Clickese”) for 20,511,365 shares of the Class A common stock, and the former owners of STI acquired the 1,142,858 shares of the Class B common stock for $1. Upon this acquisition, STI became a wholly owned subsidiary of International Mercantile Corporation. STI designs, develops and manufactures biometrical time clocks for tracking employees’ time and attendance.					On February 14, 2002, International Mercantile Corporation changed its name to T & G2 (the “Company”). In addition, the Company changed its domicile to Nevada, which brought about a reverse 8 to 1 stock split, and a change in the par value of the stock to $0.001.					In addition to STI being a wholly owned subsidiary, the Company acquired Zingo Sales Ltd. (“Zingo”) in March 2002 in a 2,500,000 share Class A common stock acquisition. Zingo’s mission is to design, develop, manufacture and market easy to use complete solutions using the latest available technologies. Their first product was a fixed based bingo unit, for which sales had been generated late in 2002. The Company sold this segment in July 2004 for $300,000. This amount is currently a note receivable on the consolidated balance sheet.					The Company has reflected the results of this subsidiary in the discontinued operations section of the statements of operations, and has reclassified the 2003 numbers to show retroactive treatment for this disposal in accordance with SFAS 144.					In November 2002, the Company issued a board resolution authorizing an increase to the authorized capital to 100,000,000 Class A common shares and the Class B common shares to remain at the 2,000,000 share level. In February 2003, the Company issued another board resolution authorizing a further increase in its authorized capital. Under this resolution, the Company increased its Class A common shares and Class B common shares to 250,000,000 shares and 5,000,000 shares authorized, respectively. With this change, the Company issued a board resolution to cancel the 1,142,858 Class B common shares, and issue to its officers 2,500,000 Class B common shares each (5,000,000 total) at par value.					On April 25, 2001, Secure Time, Inc. merged into Clickese.com at which time the resulting company changed its name to STI. The transaction was valued at $1 per share for 10,500,000 shares.

9

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES					(FORMERLY T & G2, INC.)					NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)					DECEMBER 31, 2004 AND 2003**

**NOTE 1 -    ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)**

International Mercantile Corporation was originally incorporated in the State of Missouri, on March 10, 1971. Their business purpose included among other things, maintaining an Internet based personal computer manufacturing business selling build-to-order systems throughout the United States to value added retailers and other marketers of micro-computer systems. The Company has terminated all of these business activities.						On or about March 29, 2004, the Company entered into an acquisition agreement with Holtermann & Team, GmbH, a German Company (“Holtermann”), to acquire, effective April 1, 2004, 100% of the assets and equity interests of Holtermann in exchange for 10,000,000 restricted shares of the Company’s Class A Common Stock. Under the terms of the Acquisition Agreement, the Company is the successor in interest to a certain Loan Agreement under which Holtermann is to receive $950,000 by the end of 2004. The shares of common stock were issued in April 2004.						The Company acquired WholesaleByUs (“WBU”) on July 9, 2004. WBU is a technology driven company that developed proprietary technology to sell products through the Internet. The Company acquired WBU for $112,000 and 20,000,000 restricted Class A Common Shares of stock. The Company issued 5,000,000 of these shares to WBU and the remaining 15,000,000 shares were to be issued based on sales criteria. This criteria was not reached, therefore these shares were returned to the Company. On November 4, 2005, the Company and WBU entered into a Termination Agreement (see Note 15).						The Company announced on July 22, 2004 a name change to Softnet Technology Corp.						The Company amended its previously issued consolidated financial statements. See Note 17 for the details of the amendments.

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**NOTE 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Principles of Consolidation**The consolidated financial statements include the accounts of the Company and all of its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

10

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES					(FORMERLY T & G2, INC.)					NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)					DECEMBER 31, 2004 AND 2003**

**NOTE 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED)**

**Use of Estimates**The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.**Revenue Recognition**Commencing in 2002, the Company started generating revenues. The Company currently records its revenue as follows for each of its operating entities:

Pursuant to SAB 104, the general criteria for recognition of revenue are:							1)      Persuasive evidence of an arrangement exists;							2)      Delivery has occurred or services have been rendered;							3)      The seller’s price to the buyer is fixed or determinable, and							4)      Collectibility is reasonably assured.

*A)      SoftNet Technology Corporation									          *No revenue generated.*B)       Solutions Technology, Inc. *

The only revenue generated in this company is service revenue relating to consulting and maintenance services on the company’s time clocks.									1)      The company would have an arrangement in the form of a service agreement.									2)      Delivery of the services occurred when the services were rendered, hence revenue recorded at that time.									3)      Buyer knew the terms of the agreement which were a fixed price.									4)      Collectibility was reasonably assured at the time the revenue recorded and services performed.

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11

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES						(FORMERLY T & G2, INC.)						NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)						DECEMBER 31, 2004 AND 2003**

**NOTE 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED)**

**Revenue Recognition (Continued)**

Solutions Technology’s basic agreements are driven off of the fact that this company will install and integrate the system, and then service that system with basic maintenance and support. In 2004, the company entered into contracts to install, with services rendered to maintain the system in 2005. This subsidiary did not generate significant revenue for these periods.

*C)      SoftNet International GmbH*

The only revenue generated in this company is service revenue relating to consulting services.										1)   The company would have an arrangement in the form of a service agreement.										2)   Delivery of the services occurred when the services were rendered, hence revenue recorded at that time.										3)   Buyer knew the terms of the agreement which were a fixed price.										4)   Collectibility was reasonably assured at the time the revenue recorded and services performed.

*D)      WholesaleByUS, LLC*

This company recognizes revenue upon the sales orders being placed. This company sells all of its goods over the internet, and payment occurs at the time the product is ordered (prior to shipment, which usually occurs within two to three days depending on inventory levels).										1)      There is always evidence that an arrangement exists prior to recognition of revenue.										2)      The only service being rendered in this case is the ordering of the product. Delivery occurs within two to three days after ordering the product.										3)      Buyer and seller both know the terms of the arrangement and price is fixed or determinable.										4)      Collectibility is assured. Should a credit card be rejected for any purpose, the shipment is cancelled.

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12

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES						(FORMERLY T & G2, INC.)						NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)						DECEMBER 31, 2004 AND 2003**

**NOTE 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED)**

**Revenue Recognition (Continued)**

Within general criteria number 2 of SAB No. 104 as noted above, it states, delivery has occurred or services have been rendered. To better clarify the arrangement that exists, WholesaleByUs (WBU), acts as a consignee, whereby WBU “purchases” the goods simultaneously with the sale of the goods to the customer. The service is rendered when the order is placed and it can take up to 3 to 5 days to ship that order. The service however is performed at placement, and therefore the revenue is recognized at that point. As far as when title and significant risks and rewards pass to the customer, this occurs upon shipment, i.e. FOB shipping point. If a customer were to order a product that falls above the 3 to 5 day shipment window, WBU classifies these as “special orders”. Again, WBU still recognizes revenue upon placement of that order, not shipping date.										WBU both sells a product and provides a service. They simultaneously, “purchase” the goods and sell the goods as a service over the internet. They do, however, perform these services at a rate that reduces cost for the suppliers.										WBU considers themselves the primary obligor for their product sales. When a customer orders the goods, it is WBUs’ responsibility to ensure completion of that order. WBU additionally takes responsibility for that order and it is their obligation to either return the money to the customer, or replace the goods with goods acceptable to the customer. The terms that WBU has with its suppliers are that the suppliers must accept back the goods if for any reason, the goods were not acceptable to the customer.

*E)       Indigo Technology Services (acquired after 12/31/04)*

This company mainly provides consulting services as well. Their revenue recognition is much like Solutions Technology, Inc.

13

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES							(FORMERLY T & G2, INC.)							NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)							DECEMBER 31, 2004 AND 2003**

**NOTE 2 -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED)**

**Revenue Recognition (Continued)**

Although SOP 97-2 specifically deals with software revenue recognition, there are basic principles the Company follows contained in this pronouncement. They are 1) Licensing vs. Sales, meaning transfers of rights to software by licenses rather than by outright sales will have the same impact on revenue recognition; 2) Product may not equate with delivery of software, relating to specifically when the services do not entail significant production, modification or customization of the software, the services are accounted for as a separate element; 3) Delivery is the key threshold issue for revenue recognition, which is consistent with CON #5, Recognition and Measurement in Financial Statements of Business Enterprises; 4) Revenue must be allocated to all elements of the sales arrangement, with recognition dependent upon meeting the criteria on an element-by-element basis, this being vendor specific objective evidence (VSOE). This principle does not apply to the Company at this time; and 5) The earnings process is not complete if fees are subject to forfeiture.									EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, provides guidance on whether an entity is an agent for a vendor-manufacturer, and thus recognizes the net retainage (commission) for serving in that capacity, or whether that entity is a seller of goods (principal), and thus recognizes revenue for the gross amount billed to a customer and an expense for the amount paid to the vendor-manufacturer. The Company, considers this EITF when recognizing revenue for its WholesaleByUs subsidiary. The Company considers themselves the primary obligor in an arrangement, and establishes the selling price and assumes the credit risk, therefore recognizes revenue gross.

**Cash and Cash Equivalents**The Company considers all highly liquid debt instruments and other short-term investments with an initial maturity of three months or less to be cash equivalents.								The Company maintains cash and cash equivalent balances at several financial institutions that are insured by the Federal Deposit Insurance Corporation up to $100,000.

14

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES							(FORMERLY T & G2, INC.)							NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)							DECEMBER 31, 2004 AND 2003**

**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Fixed Assets**Fixed assets are stated at cost. Depreciation is computed primarily using the straight-line method over the estimated useful life of the assets.								Furniture and fixtures                                               7 Years								Office equipment                                              3 to 5 Years								Time clock equipment                                         1.5  Years								Time clock software                                             3    Years**Income Taxes**Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates.**Segment Information**The Company follows the provisions of SFAS No. 131, “*Disclosures about Segments of an Enterprise and Related Information”*. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions.**Comprehensive Income**The Company adopted Statement of Financial Accounting Standards No, 130, “Reporting Comprehensive Income,” (SFAS No. 130). SFAS No. 130 requires the reporting of comprehensive income in addition to net income from operations. 								Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of information that historically has not been recognized in the calculation of net income.**Advertising**Costs of advertising and marketing are expensed as incurred. Advertising and marketing costs were $112,096 and $448,037 for the years ended December 31, 2004 and 2003, respectively.

15

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**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES						(FORMERLY T & G2, INC.)						NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)						DECEMBER 31, 2004 AND 2003**

**NOTE 2-    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Goodwill and Other Intangible Assets**In June 2001, the FASB issued Statement No. 142 “Goodwill and Other Intangible Assets”. This statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, Intangible Assets. It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. This Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. The Company tests for impairment of the goodwill at least annually, if not more depending upon substantial changes in the Company that may lead to a change in the goodwill during interim periods.							The following represents the changes in the carrying amount of goodwill for the years ended December 31, 2004 and 2003:

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**SoftNet****International****WBU****Total**Balance, January 1, 2003									 $               -  									 $           -  									 $           -    Goodwill acquired during the year									                 -  									             -  									              -    Impairment losses									                 -  									             -  									              -    Balance, December 31, 2003									                 -  									             -  									              -    Goodwill acquired during the year									      1,249,964									     800,000									  2,049,964  Impairment losses, restated									(1,249,964)									(800,000)									 (2,049,964)  Balance, December 31, 2004 (Restated)									 $               -  									 $           -  									 $           -  									===========									===========									===========					The impairment of goodwill was determined based on the current business plan of the Company not meeting earlier objectives and the sale of the WBU subsidiary in November 2005, and the delay of SoftNet International meeting its current budgets.
16

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES							(FORMERLY T & G2, INC.)							NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)							DECEMBER 31, 2004 AND 2003**

**NOTE 2-    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Earnings (Loss) Per Share of Common Stock**Historical net (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) includes additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be antidilutive for the periods presented.								The following is a reconciliation of the computation for basic and diluted EPS:								                                                                  December 31,           December 31,								                                                                        2004                         2003                                                                    (Restated)               (Reclassified)								Net Loss                                                      ($3,258,587)           ($2,354,632)  Weighted-average common shares								  outstanding (Basic)                                       66,521,080             56,289,764								Weighted-average common stock								   equivalents:								      Stock options                                                        -                                -								      Warrants                                                               -                                -Weighted-average common shares								    outstanding (Diluted)                                   66,521,080              56,289,764Options and warrants outstanding to purchase stock were not included in the computation of diluted EPS because inclusion would have been antidilutive.**Software Development Costs**Internal use software costs are recorded in accordance with Statement of Position (SOP) No. 98-1, *"Accounting for the Costs of Computer Software Developed or Obtained for Internal Use"*.  Qualifying costs incurred during the application development stage, which consist primarily of outside services are capitalized and amortized over the estimated useful life of the asset. All other costs are expensed as incurred. The Company has determined that all costs for the years ended December 31, 2004 and 2003, do not relate to the application development stage and therefore have expensed these costs as they were incurred.

17

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES							(FORMERLY T & G2, INC.)							NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)							DECEMBER 31, 2004 AND 2003**

**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

**Fair Value of Financial Instruments**The carrying amount reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and notes payable approximate fair value because of the immediate or short-term maturity of these financial instruments.**Stock-Based Compensation**The Company has elected to follow Accounting Principles Board Opinion No. 25, “*Accounting for Stock Issued to Employees*” (APB No. 25), and related interpretations, in accounting for their employee stock options rather than the alternative fair value accounting allowed by SFAS No. 123, “*Accounting for Stock-Based Compensation*”, and has adopted the enhanced disclosure provisions of SFAS No. 148, *“Accounting for Stock Based Compensation – Transition and Disclosures”*, an amendment of SFAS No. 123. APB No. 25 provides that the compensation expense relative to the Company’s employee stock options is measured based on the intrinsic value of the stock option.  SFAS No. 123 requires companies that continue to follow APB No. 25 to provide a pro-forma disclosure of the impact of applying the fair value method of SFAS No. 123.**Reclassifications**Certain amounts for the year ended December 31, 2003 have been reclassified to conform to the presentation of the December 31, 2004 amounts. The reclassifications have no effect on net income for the year ended December 31, 2003.**Recent Accounting Pronouncements**On December 16, 2004, the Financial Accounting Standards Board (“FASB”) published Statement of Financial Accounting Standards No. 123 (Revised 2004), “*Share-Based Payment*” (“SFAS 123R”).  SFAS 123R requires that compensation cost related to share-based payment transactions be recognized in the financial statements. Share-based payment transactions within the scope of SFAS 123R include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee share purchase plans.  The provisions of SFAS 123R, as amended, are effective for small business issuers beginning as of the next fiscal year after December 15, 2005. 

18

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES						(FORMERLY T & G2, INC.)						NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)						DECEMBER 31, 2004 AND 2003**

**NOTE 3-     ACCOUNTS RECEIVABLE**

The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated credit risk by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts has not been established at December 31, 2004, since Management is of the opinion that all accounts receivable are fully collectible.

**NOTE 4-     FIXED ASSETS**

Fixed assets consist of the following at December 31, 2004 and 2003:** **                                                                     2004                               2003Office equipment                                       $   19,369                       $  10,380							Furniture and fixtures                                        2,646                             2,646							Time clock equipment                                    38,730                            38,730							Time clock software                                       54,144                           54,144							                                                                    114,889                         105,900							                                                                    (96,503)                         (74,850)                                Total                         $   18,386                       $  31,050							                                                                 ========                     =======							Depreciation expense was $21,652 and $38,670 for the years ended December 31, 2004 and 2003. The Company sold $133,506, net of depreciation of Bingo Units upon the sale of Zingo Sales.

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**NOTE 5-     NOTES PAYABLE - BANK**

On April 3, 2001, the Company entered into a line of credit agreement with a bank. The note, which is due on demand bears interest at prime plus 2.25% and provides for maximum borrowings up to $63,100. The line of credit is guaranteed by a majority shareholder. The outstanding balance at December 31, 2004 was $0. The line of credit was STI’s, and was assigned over to the Company upon the acquisition. Interest expense charged to operations for the years ended December 31, 2004 and 2003 was $0 and $2,705, respectively.

**NOTE 6-     NOTES PAYABLE - OTHER**

The Company pursuant to a note agreement dated May 28, 2002 with Protech Trading Inc. had a note payable in the amount of $68,800, due May 30, 2003. Interest on this note was payable quarterly, at one percent per quarter, four percent annually. In addition to receiving the funds from Protech, the Company issued them 200,000 shares of common stock for consulting in accordance with the agreement. The agreement between the parties was cancelled, and the note was forgiven, The Company had reclassified this note to additional paid in capital along with all accrued interest on the note as of December 31, 2003.

19

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES						(FORMERLY T & G2, INC.)						NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)						DECEMBER 31, 2004 AND 2003**

**NOTE 7-     RELATED PARTY TRANSACTIONS**

Amounts due to/from related parties at December 31, 2004 were $63,367 and $162,622, respectively, and consists of the following:							A note payable to an officer at 10% interest, payable monthly, due on demand. At December 31, 2004, the Company has paid off this note and all remaining interest due. As of December 31, 2003 this balance was $51,922.							Note receivable from a company through common ownership in the amount of $13,894 and $7,500 at December 30, 2004 and 2003, respectively.							Note payables to a company through common ownership in the amount of $68,061 and $109,000 at December 31, 2004 and 2003, respectively, at 10% interest, payable monthly, due on demand. At December 31, 2004, the Company has approximately $16,402 and $8,739, respectively, in accrued interest to this company.							The Company has $9,200 outstanding to another entity related through common ownership at December 31, 2004 and 2003, respectively. At December 31, 2004, the Company has approximately $802 and $319, respectively in accrued interest to this company.							Prior to the acquisition by International Mercantile Corporation, STI relied upon funds from related parties to fund operations.

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**NOTE 8-     ACQUISITIONS**

On January 12, 2002, the Company acquired STI as a wholly owned subsidiary for 20,511,365 shares of common stock. At the time of the acquisition, STI’s book value of their net assets was approximately $0. The acquisition of the 20,511,365 shares were valued at the Company’s fair value at the time of the issuance which approximated $.15 per share, $3,177,556. In accordance with FASB 142, the Company impaired the goodwill for that amount.						In March, 2002, Zingo was acquired as a wholly owned subsidiary by the Company for 2,500,000 shares of common stock. Zingo Sales, Ltd., a relatively new company had very little activity and also had a net book value of approximately $0. The shares issued were valued at $1.95, the fair value of the stock at the time of issuance. The $4,875,000, was recorded as goodwill and subsequently impaired to $0. The impairment is included in the consolidated statements of operations for the year ended December 31, 2002. The Company sold Zingo in July 2004, and has accounted for this disposal in accordance with SFAS 144.

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20

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES						(FORMERLY T & G2, INC.)						NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)						DECEMBER 31, 2004 AND 2003**

**NOTE 8-     ACQUISITIONS (CONTINUED)**

On or about March 29, 2004, the Company entered into an acquisition agreement with Holtermann & Team, GmbH, a German Company (“Holtermann”), to acquire, effective April 1, 2004, 100% of the assets and equity interests of Holtermann in exchange for 10,000,000 restricted shares of the Company’s Class A Common Stock. Under the terms of the Acquisition Agreement, the Company is the successor in interest to a certain Loan Agreement under which Holtermann is to receive $950,000 by the end of 2004. The shares of common stock were issued in April 2004. The acquired assets consisted of goodwill.							The Company acquired WholesaleByUs (“WBU”) on July 9, 2004. WBU is a technology driven company that developed proprietary technology to sell products through the Internet. The Company acquired WBU for $112,000 and 5,000,000 restricted Class A Common Shares of stock. The shares of stock have not been issued as of December 31, 2004. On November 4, 2005, the Company and WBU entered into a Termination Agreement (see Note 15).

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21

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES							(FORMERLY T & G2, INC.)							NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)							DECEMBER 31, 2004 AND 2003**

**NOTE 8-     ACQUISITIONS (CONTINUED)**

The summarized unaudited pro forma financial information for the years ended December 31, 2004 and 2003 that follows assumes the acquisition of WBU and Holtermann & Team GmbH was consummated on January 1, 2003
**Years Ended****December 31,****December 31,****2004****2003**  Sales									 $        614,426									 $       167,275Cost of sales									           429,380									            92,912  Gross profit (loss)									           185,046									            74,363  Operating expenses									        3,470,207									       2,193,746  Loss before other (expense)									       (3,285,161)									      (2,119,383)  Other expense									             43,258									          244,014  Net loss before provision for income taxes									       (3,328,419)									      (2,363,397)  Provision for income taxes									                    -  									                800    Net loss 									$     (3,328,419)									$    (2,364,197)==========================  Net loss per basic and diluted shares									 $             (0.05)									 $            (0.04)==========================  Weighted average number of common shares    outstanding									       66,521,080									      56,289,764									=============									=============					The unaudited pro forma results of operations for the years ended December 31, 2004 and 2003, are not necessarily indicative of what the actual results of operations of the Company would have been had the acquisition been consummated on January 1, 2003.
22

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES							(FORMERLY T & G2, INC.)							NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)							DECEMBER 31, 2004 AND 2003**

**NOTE 9-     STOCKHOLDERS’ EQUITY (DEFICIT)**

***Preferred Stock***At December 31, 2004 and 2003, there are 5,000,000 shares of Class A Preferred Stock, par value $1.00 authorized and 0 shares issued and outstanding. In April, 2003, the Company passed a board resolution to re-instate the Series A Preferred Stock changing its par value to $.001.								Additionally, the Company passed a board resolution to authorize 5,000,000 shares of Class B Preferred Stock, par value $.001. As of December 31, 2004 and 2003, the Company has 0 and 282,703 shares issued and outstanding. 282,703 of these shares were issued to Mercatus Partners, Ltd. in connection with an amended loan agreement. These shares were issued when the Company cancelled the 66,666,667 shares of Class A Common Stock that were issued as collateral to the original loan agreement. The amended loan agreement was terminated by the Company and all 282,703 shares have been cancelled of record. As of December 31, 2004 certificates representing 117,885 have been surrendered to the Company.  An additional 668,000 shares were issued to a Bermuda company as collateral for a promissory note. These shares were valued at the par value and recorded against additional paid in capital as the preferred shares have no readily determinable market value. Effective April 9, 2004, the Company terminated this agreement due to this company’s failure to make loan advances as set forth in the agreement.  All shares have been surrendered to the Company.The remaining 2,000,000 shares of the Class B Preferred Stock was issued in accordance with a March 24, 2004 Investment Exchange Agreement (the “Agreement”) with Cross Capital Fund, LLC. (“Cross Capital”). The Company entered into the Agreement that provides for Cross Capital to make an equity investment in the Company and the Company will receive from Cross Capital an Investor Membership Interest in an aggregate amount equal to $2,000,000 over the next twelve months (March 2005). The 2,000,000 shares were issued in exchange for the Investor Membership Interest. The Company had originally recorded the $2,000,000 as a subscription receivable on the consolidated balance sheet at December 31, 2004. The Preferred shares convert to the Company’s Class A Common Shares as set forth in the agreement. Cross Capital never funded the Company in accordance with the terms of the agreement, The Company’s legal counsel and Cross Capital had several discussions regarding this agreement and the Company made several attempts to receive the 2,000,000 shares of Class B Preferred Stock back from Cross Capital and terminate their agreement. As of July 2004, the agreement was terminated. The Company has amended their consolidated financial statements to reflect the termination of the preferred stock as of December 31, 2004. (See Note 17)

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23

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES							(FORMERLY T & G2, INC.)							NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)							DECEMBER 31, 2004 AND 2003**

**NOTE 9-     STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)**

***Common Stock***As of December 31, 2004 and 2003, there were 500,000,000 and 250,000,000 shares authorized, and 263,150,469 and 35,669,077 shares issued, 150,000,000 and 0 shares in escrow and 112,869,069 and 35,377,677 shares outstanding respectively, of the Company’s common stock A with a par value of $.001. In February 2003, the Company upon an approved board resolution increased the authorized limit of the Class A common shares to 250,000,000 and increased it to 500,000,000 in 2004.								As of December 31, 2004 and 2003, there were 5,000,000 shares authorized, and 5,000,000 shares issued and outstanding of the Company’s common stock B with a par value of $.001, respectively. In February 2003, the Company upon an approved board resolution increased the authorized limit of the Class B common shares to 5,000,000. Subsequent to this board resolution, the Company cancelled the outstanding 1,142,858 shares and issued the entire 5,000,000 shares to two of its officers.								The following shares of common stock Class A were issued for the years ended December 31, 2004 and 2003:								The Company in the quarter ended December 31, 2004 issued 12,525,000 shares of common stock for cash in the amount of $536,000.								The Company issued 5,000,000 shares of common stock in its acquisition of WholesaleByUs. There were 15,000,000 shares to be issued based on certain sales criteria being met. Those criteria were not met, and therefore not issued. The shares are valued at $800,000 and were originally reflected as goodwill on the consolidated balance sheet at December 31, 2004. The Company in its restated financial statements impaired this goodwill. On November 4, 2005, the Company and WBU entered into a Termination Agreement (see Note 15).								The Company in the quarter ended September 30, 2004 issued 17,433,333 shares of common stock for cash in the amount of $205,500.								The Company in September 2004 issued 150,000,000 shares of common stock as collateral under a loan agreement. These shares are being held by an escrow agent, and are restricted. The Company has recorded these shares at the fair value of $900,000, and has classified them in their equity section as collateral under note agreement. In May, 2005, the Company terminated this agreement, however, have not received back the shares of stock. The Company has reflected these shares as issued but not outstanding since they are with the escrow agent and have placed a cautionary stop on the certificate.

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**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES							(FORMERLY T & G2, INC.)							NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)							DECEMBER 31, 2004 AND 2003**

**NOTE 9-     STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)**

***Common Stock (Continued)***The Company in the quarter ended June 30, 2004 issued 13,858,059 shares of common stock for cash in the amount of $237,231. In addition, the Company has a subscription receivable of $39,930 due for a portion of these shares.								The Company in April 2004 issued 10,000,000 shares of common stock to Holtermann valued at $1,000,000 for the acquisition of that company. On January 14, 2004, the Company entered into a Loan and Security Agreement and a Multiple Advance Promissory Note with a Bermuda company. This agreement establishes a multiple advance loan of a maximum of $2,600,000. As collateral for this note, the Company issued 668,000 shares of its Series B Preferred Stock. Additionally, the Company issued to the Bermuda company a warrant for the purchase of up to 6,000,000 shares of the Company’s common stock A at an exercise price of $.15 per share. The warrants carry no registration rights. Both the Series B Preferred Stock and the warrants have been cancelled due to the Bermuda company’s failure to fund the loan.								The Company issued 3,585,000 shares to consultants at various fair market value prices for a total expense of $331,650 (average value of $.09 per share) during the quarter ended March 31, 2004.								The Company issued 30,000 shares for legal services for $3,300 (value of $.11 per share) during the quarter ended March 31, 2004.								The Company issued 50,000 shares during the quarter ended March 31, 2004 in conversion of accrued expenses valued at $7.500 ($.15 per share).								The Company received $106,000 of subscriptions receivable in the quarter ended March 31, 2004 that related to stock issuances in 2003.								There were 1,600,000 shares of stock issued in the quarter ended December 31, 2003 for consulting services (including legal fees) at a fair value of $248,000 ($.15 per share).								There were 2,100,000 shares of stock issued in the quarter ended December 31, 2003 for cash for $203,510 ($.09 per share). The Company recorded an additional $139,120 on these shares to record the discount provided and bring the fair value of the shares issued to an average of $.16 per share, which was the fair value of the shares on the dates issued. In addition, the Company has a subscription receivable of $122,560 relating to these shares. The Company also, in the quarter ended December 31, 2003 received $65,000 relating to shares issued in the quarter ended September 30, 2003.

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**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES							(FORMERLY T & G2, INC.)							NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)							DECEMBER 31, 2004 AND 2003**

**NOTE 9-     STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)**

***Common Stock (Continued)***There were 525,000 shares of stock cancelled in the quarter ended December 31, 2003 for accrued compensation to the officers of the Company at a fair value of $105,000 ($.20 per share).								There were 1,210,000 shares of stock issued in the quarter ended September 30, 2003 for consulting services (including legal fees) at a fair value of $170,400 ($.14 per share).								There were 5,625,000 shares of stock issued in the quarter ended September 30, 2003 for cash for $626,693 ($.11 per share). The Company recorded an additional $228,307 on these shares to record the discount provided and bring the fair value of the shares issued to an average of $.15 per share, which was the fair value of the shares on the dates issued. In addition, the Company has a subscription receivable of $65,000 relating to these shares. The Company also, in the quarter ended September 30, 2003 received $172,000 relating to shares issued in the quarter ended June 30, 2003.								There were 985,000 shares of stock issued in the quarter ended September 30, 2003 for accrued compensation to the officers of the Company at a fair value of $165,000 ($.16 per share).								There were 3,332,000 shares of stock issued in the quarter ended June 30, 2003 for consulting services (including legal fees) at a fair value of $261,960 ($.07 per share).								There were 8,280,000 shares of stock issued in the quarter ended June 30, 2003 for cash for $651,700 ($.079 per share). The Company recorded an additional $112,183 on these shares to record the discount provided and bring the fair value of the shares issued to an average of $.09 per share, which was the fair value of the shares on the dates issued. In addition, the Company has a subscription receivable of $172,000 relating to these shares.								There were 800,000 shares of stock issued in the quarter ended June 30, 2003 for accrued compensation to the officers of the Company at a fair value of $45,200 ($.0565 per share).								There were 32,100,000 shares of stock issued in the quarter ended June 30, 2003 as collateral for a note payable agreement that the Company had anticipated entering into. These shares had a fair value of $2,247,000 ($.07 per share). The note payable was entered into, and due to a default on or about May/June 2003 by the other party to the transaction in July 2003, the shares were returned and cancelled by the Company.

****

******

26

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES							(FORMERLY T & G2, INC.)							NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)							DECEMBER 31, 2004 AND 2003**

**NOTE 9-     STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)**

***Common Stock (Continued)***There were 66,666,667 shares of stock cancelled in the quarter ended June 30, 2003 that were issued as collateral for a note payable agreement that the Company had entered into with Mercatus Partners, Ltd. These shares had a fair value of $8,666,667 ($.13 per share), and were being held in escrow. In April 2003, the Company amended the loan agreement and these shares were cancelled as a result of the amendment, and the Company issued 282,703 shares of Series B Preferred Stock at par value of $.001.  As set forth above, those shares have similarly been cancelled.								The Company, in the quarter ended March 31, 2003 received $43,900 relating to shares issued in 2002.***Treasury Stock***In January 2003, the Company instituted a buy back program of its own stock. For the six months ended June 30, 2004, the Company bought back no additional shares of its common stock and placed it in its treasury. For the year ended December 31, 2003, the Company bought back 281,400 shares of its common stock and placed it in its treasury. The Company has accounted for its treasury stock utilizing the cost method, and such, the $37,338 at December 31, 2004 represents the cost value of the treasury shares acquired by the Company.***Stock Options***As of January 1, 2000, STI adopted a stock option plan under which 20,000,000 shares of common stock are available for issuance with respect to awards granted to officers, management, consultants, and any other key employees of STI.  The options were to be exercised at not less than 85% of the fair market value of the shares on the date of grant.  The options were to expire after 10 years from the date of grant.  The options were to be exercisable immediately when granted and are were subject to restrictions on transfer, repurchase and right of first refusal. When in 2002, STI was acquired by the Company, these options were cancelled and replaced with identical options of the Company.								The Company applies APB Opinion 25 and related interpretation in accounting for stock options.  The Company did not record any compensation expense for the granting of options in the years ended December 31, 2004 and 2003.

******

****

****

****

27

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES							(FORMERLY T & G2, INC.)							NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)							DECEMBER 31, 2004 AND 2003**

**NOTE 9-     STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)**

***Stock Options (Continued)***

**Options**

****

****

**Weighted Average										Exercise Price**

									Options outstanding at December 31, 2002									Granted during the year									Surrendered, forfeited or expired									Exercised

										9,400,000										0										0										0

										$

										.0025										.0025										-										.0025

									Options outstanding at December 31, 2003

										9,400,000

       .0025

									Options outstanding at December 31, 2003									Granted during the year									Surrendered, forfeited or expired									Exercised

										9,400,000										0										0										0

										 .0025										.0025										-										0025

									Options outstanding at December 31, 2004

										9,400,000

										$

										.0025
================================
						Exercisable options outstanding, and the related weighted average exercise price at December 31, 2004 and 2003 were 9,400,000 and 9,400,000, and $0.0025 and $.0025, respectively.						The following tabulation summarizes certain information concerning outstanding and exercisable options at December 31, 2004 and 2003.

****

**2004**

****

**2003**

     Outstanding options:									         Number outstanding									         Weighted average exercise price									         Weighted average remaining									             contractual life in years

									$

										9,400,000										.0025										5.50

										$

										9,400,000										0025										6.50

									     Exercisable options:									         Number outstanding									         Weighted average exercise price

									$

										9,400,000										.0025

										$

										9,400,000										.0025

						If the Company had elected to recognize compensation based on the fair value of the options granted at the grant date, net loss and loss per share would have been increased to the following pro forma amounts shown below:

28

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES							(FORMERLY T & G2, INC.)							NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)							DECEMBER 31, 2004 AND 2003**

**NOTE 9-     STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)**

***Stock Options (Continued)***

**2004**

****

**2003**

As reported net loss from continuing operations:								Add: Stock-based compensation expense included in reported net loss from continuing operations, net of related tax effects								Deduct: Total stock-based compensation expense determined under fair value based method for all awards, net of related tax effects								Pro forma loss from continuing operations								Basic and diluted loss per share from continuing operations:								As reported								Pro forma

									$									$									$									$									$									$

									(2,058,587)									0									0									(2,058,587)									(.03)									(.03)

									$									$									$									$									$									$

									(2,354,632)									0									0									(2,354,632)									(.04)									(.04)

					The fair value of each option granted during the year ended December 31, 2004 and 2003, was $0.00 and $0.00, respectively.  The fair value of each option grant was estimated on the date of the grant using the Black-Scholes Option Pricing Module, using the following assumptions:

**2004**

****

**2003**

								Risk-free interest rate								Expected life in years								Expected volatility								Expected dividend yield

									4.00%									5.50									100%									0%

									4.00%									6.50									100%									0%

29

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES								(FORMERLY T & G2, INC.)								NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)								DECEMBER 31, 2004 AND 2003**

**NOTE 10-   GOING CONCERN**

As shown in the accompanying consolidated financial statements the Company has incurred significant recurring losses of $3,258,587 and $2,354,632 for the years ended December 31, 2004 and 2003, and has a working capital deficiency of $200,588 as of December 31, 2004.  The Company has made acquisitions in the past eighteen months that has had little impact on its operations, and in one case has terminated an agreement. There is no guarantee that the Company will be able to raise enough capital or generate revenues to sustain its operations.  These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period.									Management believes that the Company’s capital requirements will depend on many factors including the success of the Company’s planned acquisition of Inspara, Inc. The Company’s ability to continue as a going concern for a reasonable period following its pending acquisition of Inspara is also dependent upon management’s ability to raise additional interim capital and, ultimately, achieve profitable operations.  There can be no assurance that management will be able to raise sufficient capital, under terms satisfactory to the Company, if at all.									The consolidated financial statements do not include any adjustments relating to the carrying amounts of recorded assets or the carrying amounts and classification of recorded liabilities that may be required should the Company be unable to continue as a going concern.

**NOTE 11-   COMMITMENTS**

In November 2002, the Company installed its Securetime system in a restaurant at a major Las Vegas, Nevada casino. The Company has also received an order for the Securetime system from a Native American business in Oklahoma and the installation was completed in late November. Both of these installations signed contracts for continuing and ongoing services in March 2003. In the first quarter of 2004, Securetime has installed a biometric ID system in a bingo facility in Wyoming. All of these systems are currently being upgraded by the Company, and additionally, the Company has installed a system in a legal printing facility in Los Angeles.

30

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES											(FORMERLY T & G2, INC.)											NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)											DECEMBER 31, 2004 AND 2003**

**NOTE 12-   LITIGATION**

In an action commenced on or about March 28, 2002 in the Supreme Court of the State of New York, the plaintiff seeks $40,000 in damages from the Company as well as other defendants listed in this action, allegedly sustained as a result of third party payments made on behalf of all defendants, including, but not limited to the Company. An answer denying all material allegations was served upon the Plaintiff on May 1, 2002, within the time allotted by law to do so. The Plaintiff as of March 25, 2004, has failed to respond to the Company’s discovery demands. The Company will seek an Order of the Court dismissing this action due to the plaintiff’s failure to comply. Management is of the belief that all allegations involved in this action are without merit. No liability is recorded for this action as of December 31, 2004.

**NOTE 13-   PROVISION FOR INCOME TAXES**

Deferred income taxes will be determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities.  Deferred income taxes will be measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s consolidated tax return.  Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.									At December 31, 2004, deferred tax assets approximated the following:									Net operating loss carryforwards                 $6,937,257									Less:  valuation allowance                            (6,937,257)                                                                  $          -0-  									                                                                  =========									At December 31, 2004, the Company had accumulated deficits  approximating $20,403,696 available to offset future taxable income through 2024.  The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods.									A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal statutory rate for the years ended December 31, 2004 and 2003 is summarized as follows:

****

****

****

****

****
    									2004									2003Federal statutory rate									(34.0)%									(34.0)%State income taxes, net of federal benefits									4.0									4.0Valuation allowance									30.0									30.0									0%									0%====================
31

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES								(FORMERLY T & G2, INC.)								NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)								DECEMBER 31, 2004 AND 2003**

**NOTE 14–  DISPOSAL OF BUSINESS**

In July 2004, the Company sold Zingo Sales. The Company’s consolidated financial statements have been reclassified to reflect these sales as discontinued operations for all periods presented. Summarized operating results of discontinued operations are as follows:

For the Years Ended          December 31          

2004

2003

Revenues

$    158,977

$           51,135

Income (loss) before								income taxes

$        8,482

$         (97,983)

Provision for taxes

                 -

                    -

Net income (loss)

$        8,482

$         (97,983)
============================
Net income (loss) per share

$         (.00) 

$                (.00)
============================
Diluted income (loss)								per share

$         (.00)

$                (.00)
============================
**NOTE 15-   SUBSEQUENT EVENTS**

The Company in January 2005 changed the name of its German subsidiary to SoftNet International GmbH.					The Company acquired Indigo Technology Services (Indigo), a technology company based in Atlanta, Georgia and Net Centric Solutions, Inc. in April 2005 for 9,000,000 shares of restricted Class A Common Shares of stock (6,000,000 for Indigo and 3,000,000 for Net Centric). The Company in this transaction acquired $14,170 of accounts receivable and $58,235 in cash. The shares were valued at $.15 per share at the time of the transaction for a value of $1,350,000. The remaining $1,277,595 was recognized as goodwill.					Indigo is a provider of business technology consulting and technology products and solutions designed to help companies integrate technology into everyday lives. Indigo is the creator of Guest Worx High Speed Internet Access. Net Centric provides similar services that Indigo provides.

32

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES								(FORMERLY T & G2, INC.)								NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)								DECEMBER 31, 2004 AND 2003**

**NOTE 15-   SUBSEQUENT EVENTS (CONTINUED)**

In June 2005, the Company and Alexander Holtermann (“Lender”) entered into a Loan Agreement whereby the Company issued 100,000,000 shares of its Class A common stock as collateral for a loan in the amount of 30% of the Market Value of the Company’s Class A common stock as defined in the Loan Agreement. On November 28, 2005, the Loan Agreement was terminated due to the Lender’s failure to fund the loan. By letter dated November 28, 2005, the Company returned the share certificates to the Company’s transfer agent for cancellation. There are no further obligations outstanding with respect to the Loan Agreement.					On August 1, 2005, the Company acquired the customer lists of Cord Consulting for $200,000. In this acquisition, the Company issued to Cord Consulting a note in the amount of $25,000, and issued to the sole owner of Cord Consulting 727,620 shares of common stock with a value of $175,000. The customer lists are being amortized over 3 years commencing August 1, 2005.					On October 17, 2005, Indigo entered into an Asset Purchase Agreement whereby they sold to Seamless Skyy-Fi, Inc. (“Seamless”) all of its right, title and interest in the “Guest Worx” business of Indigo, including without limitation, all assets, property (including the Guest Worx software) and contracts, in a cashless transaction where the consideration consisted of the delivery of the sufficient number of shares of Seamless’ Class C Preferred Stock with a market value of $100,000 as calculated in the Asset Purchase Agreement. These preferred shares have been converted to common shares totaling 2,500,000. The investment represents approximately 2% of Seamless.					On October 31, 2005, the Company entered into a Plan and Agreement of Reorganization with Inspara, Inc., a Delaware corporation (“Inspara”). Under the terms of the Agreement, Inspara will merge with and into the Company (the Merger). The Merger was scheduled to close no later than November 29, 2005. At the closing, Inspara was to exchange all of its common stock for approximately 40,909,091 shares of common stock of the Company and receive 291,000 shares of the Company’s Class B common stock. The Company and Inspara on November 4, 2005, extended the due date to December 15, 2005, without revising any of the terms of the transaction. The transaction did not close on December 15, 2005, and the Company and Inspara entered into an Amended Plan and Agreement of Reorganization as of January 1, 2006, whereby the number of shares Inspara is to receive was increased to approximately 50,000,000 and established a new closing date of January 18, 2006. On January 18, 2006, the Company closed the Inspara, Inc. Merger.  Following the Merger, the stockholders

33

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES								(FORMERLY T & G2, INC.)								NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)								DECEMBER 31, 2004 AND 2003**

**NOTE 15-   SUBSEQUENT EVENTS (CONTINUED)**

of InsPara received, a adjustments for rounding and fractional shares, *pro rata*, a total of 49,999,998 shares of the Company’s Common Stock (the “Acquisition Shares”).  The Acquisition Shares are unregistered shares and will only be free trading upon a filing of a Registration Statement for the Acquisition Shares, or an exemption from the registration thereof.									On November 4, 2005, the Company entered into an Agreement to Terminate Business Relationship (the “Termination Agreement”) with its wholly-owned subsidiary, WholesaleByUs and five individuals. The individuals were the former members of the limited liability company that the Company acquired on July 1, 2004. The Company acquired WholesaleByUs for $112,000, plus 20,000,000 shares of the Company’s common stock of which 5,000,000 shares of common stock were issued and the remaining 15,000,000 were to be issued upon achievement of certain incentives in the contract which never occurred. Pursuant to the terms of the Termination Agreement, the former members of the limited liability company who received these shares, returned 17,416,666 of these previously issued shares. In exchange, the Company has returned all ownership interests in WholesaleByUs back to the five individuals and has agreed to remit $10,000 to the five individuals. Each party to the transaction have provided mutual releases for any claims, except for intentional fraud and misrepresentation arising under the Acquisition Agreement of July 1, 2004. This divestiture is effective as of October 1, 2005. With the sale of WholesaleByUs, the Company has no significant online retail sales operations at this time.									On or about December 31, 2005, the Company and Integrity Time, Inc. entered into a certain Stock Purchase Agreement (the “Agreement”) whereby the Company sold its wholly owned subsidiary, Solutions Technology, Inc., for a purchase price of $100,000 in cash.  $50,000 was paid in January 2006 connection with the execution of the Agreement and the remaining $50,000 was paid on or about March 1, 2006, at which point the sale became fully consummated.  At that point the Company will reflect the disposal of the subsidiary.

**NOTE 16-   SEGMENT INFORMATION**

The Company’s reportable operating segments include Internet Sales, Consulting and Services - General and Corporate. The Company allocates cost of revenues and direct operating expenses to these segments.					Operating segment data for the years ended December 31, 2004 and 2003 are as follows:					For the year ended December 31, 2004:

34

**SOFTNET TECHNOLOGY CORP. AND SUBSIDIARIES								(FORMERLY T & G2, INC.)								NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)								DECEMBER 31, 2004 AND 2003**

**NOTE 16-   SEGMENT INFORMATION (CONTINUED)**

****

****

   

Internet

Consulting and

Corporate

Sales

Services

Total

Revenues

$               -

$    291.282

$        52,478

$    343,760

Direct costs of revenues

                 -

   197,721

                4,084

201,805

Gross profit (loss)

-

93,561

48,394

141,955

Operating expenses

891,695

173,068

245,199

1,309,962

Depreciation, amortization and									impairment

1,827

400,590

1,669,199

2,071,616

Other income

-

-

-

-

Interest (net)

6,680

-

36,848

43,528

Net income (loss)

(900,202)

(480,097)

(1,902,852)

(3,283,151)

Segment assets

328,341

45,810

236,138

610,289

Fixed Assets, net of depreciation

7,341

      5,305

                5,740

18,386
					For the year ended December 31, 2003:
  

Internet

Consulting and

Corporate

Sales

Services

Total

Revenues

$                -

$        -

$      14,834

  $     14,834

Direct costs of revenues

                 -

               -

  2,528

     2,528

Gross profit (loss)

-

-

12,306

12,306

Operating expenses

1,933,905

-

264,365

2,198,270

Depreciation, amortization and								impairment

1,650

-

37,020

38,670

Other income

-

-

-

-

Interest (net)

11,250

-

19,965

31,215

Net income (loss)

(1,946,805)

-

(309,044)

(2,255,849)

Segment assets

24,900

-

286,898

311,798

Fixed Assets, net of depreciation

9,168

              -

21,882

   31,050
**NOTE 17-   RESTATED FINANCIAL STATEMENTS**
The Company has restated its previously issued consolidated financial statements to include:
- Full segment reporting information for the operating segments of the Company (see Note 16);   Revised disclosure regarding revenue recognition for the Company’s operating segments (see Note 2);Restatement of goodwill and disclosure of the goodwill in accordance with SFAS 142;
- Termination of the Cross Capital agreement and retroactive cancellation of the 2,000,000 Class B Preferred Shares issued in that transaction (see Note 9); and   Added disclosure pursuant to SFAS 141 on the acquisitions the Company made (see Note 8).
The net effect of these changes resulted in an increase in the net loss and accumulated deficit of $1,200,000 the result of which was the further impairment of the Company’s goodwill to bring the restated loss to $3,258,587 and the restated accumulated deficit to $20,403,696 as of and for the year ended December 31, 2004. There were no restatements pertaining to the year neded December 31, 2003.

35